Never thought I’d see this again… (From Porter & Company) Written by Thomas Hughes
Zeta Global Holdings' (NYSE: ZETA) stock price decreased sharply in November because of a short report. The report alleges financial misconduct and predatory business practices that appear to be unfounded. External counsel assisted the company’s detailed response, which refuted the claims, calling them self-serving misrepresentations and speculative conjecture. The takeaway is that this marketing-focused data cloud provider is fundamentally sound and trading at a discount. The discount in Zeta Global Holdings shares is highlighted by insider buying, which stepped in to support the market not with money but sentiment. The insiders own a substantial double-digit portion of the shares and have no reason to buy this stock other than for its value, scandal or not. Four insiders, including the CEO and CFO, bought stock, which was also significant because this was the first activity in a year, and the last was selling. The institutional activity is also telling. The institutions own about 75% of the stock and have been buying on balance since the IPO. The buying pace has been elevated in 2024 and remains strong in Q4, with purchases outpacing sales by more than 2-to-1. The largest shareholders include fund managers Vanguard and BlackRock, but institutions are broadly represented, providing a solid support base. Recent large buyers include Geode Capital Management and State Street, which purchased the stock after the short report was released and own nearly 2% each. Zeta Global Holdings Growth Accelerates in 2024 Zeta Global Holdings is an omnichannel, data-centric cloud services provider that delivers enterprise marketing intelligence and automation services. Its AI-powered business is growing at a high double-digit pace in 2024, bordering on hyper-growth and outpacing the consensus estimates on a growing client base and deepening service penetration. The only bad news is that growth will slow into the 20% range next year, but the forecasts are likely low. AI service growth is only in the first inning of a long game, and Zeta Global Holdings is well-positioned to deliver. Easing monetary, regulatory, and tax policy is expected to create economic tailwinds in 2025 that will drive demand throughout the economy. The analysts remain steadfast in their support for Zeta Global Holdings. The short report caused one downgrade to Hold and one price target decrease offset by a recent price target increase from Canaccord Genuity. Canaccord waited until after the company issued its rebuttal before making its move. It raised its price target to $28, citing a “more comfortable” view of the business. In their opinion, the company remains on solid footing, and management is doing a good job of bolstering public opinion. Their efforts are not limited to buying stock for personal accounts but include a new company buyback authorization. The new authorization is worth $100 million and increased the existing allotment to $114 million, which is worth 2.4% of the stock. Regarding the balance sheet, the company is well-capitalized with minimal debt and ultra-low leverage. Total liability was less than 1x equity and 1x cash at the end of Q3. The Technical Outlook: Zeta Global Holdings Falls to Critical Support Level The price action in Zeta Global Holdings is ugly. The stock fell over 50% to a critical support level near $18. That level aligns with a consolidation earlier in the year and may be strong enough to keep the market from falling further. The price of ZETA stock could rebound sharply in that scenario, potentially advancing to the analyst's consensus target of $38, a gain of 100% from the critical support level. If not, this market could fall to new lows, which is unexpected. The consensus forecast is for Zeta Global Holdings' revenue and profit growth to steadily accelerate through the decade's end. If you missed it, my emergency election broadcast is now available - but will be removed soon Click here to watch it now.
Written by Sam Quirke
Shares of Microsoft Corp (NASDAQ: MSFT) have been a cornerstone of tech portfolios for many years now, and 2024 has done little to tarnish that reputation. The stock is up a solid 15% year-to-date, and while it's struggled to push past July's all-time high, there are several reasons for investors to be excited. Chief among these is the fact that analysts are exceedingly bullish on the tech titan's prospects heading into 2025. With the stock trading in a narrowing range, we could soon be looking at a breakout. Its shares are currently less than a 10% move away from July's high, so let's jump in and see what could send them soaring past it in the coming weeks. Microsoft's Fundamental Performance Continues to Impress For starters, there's the company's impressive fundamental performance. Microsoft has consistently beaten analyst expectations for its earnings for over two years, with this trend continuing with its most recent report at the end of last month. That report saw the company smash expectations for both headline numbers, with revenue growth standing out with a 16% year-on-year gain. Investors should expect further gains heading into the rest of the year, as the holiday quarter historically tends to be Microsoft's strongest. Bullish Analyst Updates Keep Microsoft in the Spotlight Building on the fact that the internals are ticking over nicely, always a good starting point when considering a stock, is the fact that several analysts have been calling Microsoft a red-hot buy right. The teams at Royal Bank of Canada, UBS Group, and JPMorgan, to name just a few, have all reiterated their Buy ratings or equivalents in the past month alone. These updates echo a broader sentiment among analysts who have been consistently bullish on Microsoft throughout 2024. Just last week, the Wedbush team doubled down on their bullish outlook for Microsoft, reiterating a Buy rating and a lofty $550 price target. From where the stock closed on Tuesday night, that's pointing to a targeted upside of nearly 30%. Needless to say, were Microsoft shares to hit that in the coming weeks, they'd be well above July's high and cruising into blue sky territory. Potential Concerns: Analysts Reassess Microsoft Price Targets While there is a lot of optimism about the stock, there are some notes of caution to consider. While maintaining their bullish ratings, some analysts have been reining in their price targets. For example, TD Cowen recently lowered theirs, citing higher capital expenditure forecasts. Still, the fact that they held off on doing a full downgrade from their Buy says enough about their confidence in the company's long-term prospects. Plus, even their revised $475 price target would have the stock trading at a fresh high. For further counterbalance, it's worth noting that Morgan Stanley did the opposite with their price target on Microsoft shares and actually boosted it following last month's report. Microsoft’s Technical Setup Suggests December Gains Are Likely From a technical perspective, there's a lot to like as well. After months of steady consolidation and mostly sideways price action, the stock is now setting higher lows, a key indicator of building momentum. Strengthening this thesis is the fact that Microsoft's MACD is on the verge of a bullish crossover, while its Relative Strength Index (RSI) is just 57. For context, the RSI is a popular technical indicator that measures the speed and magnitude of a stock's recent price changes to assess whether it is overbought or oversold. It runs on a scale of 0 to 100, with readings above 70 indicating overbought conditions and below 30 signaling oversold conditions. At 57, Microsoft's RSI suggests that momentum is firmly on the bull's side, and the stock has a lot of room to run before it could even be considered. With the Fed cutting interest rates and broader indices like the S&P 500 currently at record levels, the macro environment also adds to the sense that a breakout to the north could be on the cards. Investors should look for the stock to continue setting higher lows into December, with a move above $440 all but confirming the breakout has begun. He turned PayPal from a tiny, off-the-radar startup… to a massive $64 billion giant.
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Written by Gabriel Osorio-Mazilli
Every quarter, retail investors get the chance to look inside the house of money as the regulatory 13F filings come out for some of Wall Street’s biggest players. Inside these reports, investors can see who has been buying and selling certain stocks, not necessarily to piggyback on these ideas but to potentially connect the dots moving forward for their own market views. The data as of November 2024 shows that mega investors like Bill Ackman, Howard Marks, and Michael Burry decided to boost their holdings in certain areas of the market during the most recent quarter. These areas may not be the most popular today, but that is part of what comes with taking on a value investment. Hunters need to be willing to take the contrarian route. By buying a beaten-down consumer discretionary stock like Nike Inc. (NYSE: NKE), Bill Ackman believes today’s price is nothing short of a good deal. The same can also be said of Burry buying even more stock in Alibaba Group (NYSE: BABA), a rare Chinese bet, despite the bearish price action that Howard Marks accompanied in his PDD Holdings Inc. (NASDAQ: PDD) position. Then, an even less common move made by the hedge fund industry into cryptocurrency is to be considered. What Ackman Hopes to See With His Nike Stock Investment After recent filings, investors will notice that Bill Ackman has built himself a position of up to 16.2 million shares of Nike stock, a move that not many would have the courage to make considering the stock trades at a dismal 63% of its 52-week high. It isn’t common to see big buyers when a stock demonstrates such bearish price action, but that’s where most value investors earn their paycheck. This time around, plenty of tailwinds push the envelope for Nike stock to potentially stage a comeback. One of them is the broader economic landscape, which has investors jumping back and forth between a potential recession or inflation scenario based on the price action between many asset classes. Because most of the market’s attention is now on technology, stocks like Nike fly under the radar today. Whether there is an inflation or recession scenario, Nike’s scale at $115 billion market capitalization, along with its international exposure and reach, helps the brand cushion whatever impact they may have on the industry. It would seem some on Wall Street also share in Ackman’s enthusiasm for Nike stock. Analysts at Guggenheim kept their Buy ratings on Nike stock as of October 2024 and have not changed them since. As a vote of confidence already, investors can add the valuation of $110 a share placed on Nike stock for further validation into this potential investment, which calls for a net upside of as much as 42% from where the stock trades today. Why Michael Burry and Howard Marks Are Betting on China Today Compared to the United States, China's technology sector offers one of the widest divergences in history today, an opening that these two value investors are willing to uncover for a profit. Michael Burry has added once more to his largest position, Alibaba stock, and it seems he's not alone in this view. As of November 2024, Sanders Capital decided to boost its stakes in the Chinese giant by 0.3%. While this new allocation may not seem like much percentage-wise, it brought its net investment to a high of $1.9 billion, a direct vote of confidence in Alibaba's future. With analysts at Barclays assigning a $130 price target, Burry and other investors now face up to 53% upside from where the stock trades today. This is an undeniably attractive deal for those willing to invest in overseas markets. Another willing investor is Howard Marks, who chose PDD as his Chinese commerce pick. That stock now trades at a low 60% of its 52-week high, making it a similar discount—price action-wise—to where Ackman decided to buy Nike stock. More than that, the consensus price target from Wall Street analysts now sits at $173.4 a share, calling for a 74.6% upside from where it trades today. These picks cover discounts, double-digit upside, and a way to diversify away from the two potential themes that might take over the United States economy: Burry and Marks. Hedge Funds Are Turning to Bitcoin ETFs After reiterating his view on inflation during a recent CNBC interview, Paul Tudor Jones has decided to hedge this possibility by buying heavily into Bitcoin through his hedge fund. Jones bought up to $230 million worth of Bitcoin through spot positions and the iShares Bitcoin Trust (NASDAQ: IBIT). That ETF didn’t just attract Jones and his hedge fund; other institutional players on Wall Street joined the party as well. As of the second quarter of 2024, Goldman Sachs decided to buy up to $238 million into the same Bitcoin ETF, joining Jones’ timing on this new asset class. Then, Capula Management, a London-based hedge fund, recently revealed its massive $400 million position in this Bitcoin ETF. It makes sense that this would be the case since the markets are risk-on and face the possibility of inflation themes coming back into the scene. This little-known project that Bill Gates has been quietly working on that’s about to unleash an AI breakthrough so advanced, it’s going to make ChatGPT look like VHS.
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